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AB-1139 Real property: transfer fees: notices.(2017-2018)

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Date Published: 07/31/2017 09:00 PM
AB1139:v95#DOCUMENT

Assembly Bill No. 1139
CHAPTER 148

An act to amend Section 1098.5 of the Civil Code, relating to real property.

[ Approved by Governor  July 31, 2017. Filed with Secretary of State  July 31, 2017. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 1139, Reyes. Real property: transfer fees: notices.
Existing federal regulations generally prohibit the Federal Home Loan Mortgage Corporation and any affiliate thereof, the Federal National Mortgage Association and any affiliate thereof, and any Federal Home Loan Bank from purchasing, investing, or otherwise dealing in any mortgages on properties encumbered by private transfer fee covenants, as defined, securities backed by such mortgages, or securities backed by the income stream from such covenants, unless the private transfer fee covenant meets specified requirements, including that it provides a direct benefit, as defined, to the encumbered property or is otherwise exempted as provided.
Existing law defines a transfer fee with respect to real property and requires the receiver of the fee as a condition of the payment of the fee, on and after January 1, 2009, to record specified information in the chain of title. Existing law specifies that when a transfer fee is imposed upon real property on or after January 1, 2008, the person or entity imposing the transfer fee, as a condition of payment of the fee, must record a separate document meeting specified requirements. Among other things, that document must contain the title “Payment of Transfer Fee Required” in at least 14-point boldface type and include names of all current owners of the real property subject to the fee, and the legal description and assessor’s parcel number for the affected property, and the fee amount.
This bill, unless a specified exception under federal regulations applies, would require that document, for private transfer fees created on or after February 8, 2011, to contain a notice in at least 14-point boldface type disclosing certain information, including that federal housing agencies are prohibited from dealing in mortgages on properties encumbered by private transfer fee covenants that do not provide a direct benefit to real property encumbered, and that if a person purchases such a property, that person may have difficulty obtaining financing.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1098.5 of the Civil Code is amended to read:

1098.5.
 (a) For transfer fees, as defined in Section 1098, imposed prior to January 1, 2008, the receiver of the fee, as a condition of payment of the fee on or after January 1, 2009, shall record, on or before December 31, 2008, against the real property in the office of the county recorder for the county in which the real property is located a separate document that meets all of the following requirements:
(1) The title of the document shall be “Payment of Transfer Fee Required” in at least 14-point boldface type.
(2) The document shall include all of the following information:
(A) The names of all current owners of the real property subject to the transfer fee, and the legal description and assessor’s parcel number for the affected real property.
(B) The amount, if the fee is a flat amount, or the percentage of the sales price constituting the cost of the fee.
(C) If the real property is residential property, actual dollar-cost examples of the fee for a home priced at two hundred fifty thousand dollars ($250,000), five hundred thousand dollars ($500,000), and seven hundred fifty thousand dollars ($750,000).
(D) The date or circumstances under which the transfer fee payment requirement expires, if any.
(E) The purpose for which the funds from the fee will be used.
(F) The entity to which funds from the fee will be paid and specific contact information regarding where the funds are to be sent.
(G) The signature of the authorized representative of the entity to which funds from the fee will be paid.
(b) When a transfer fee, as defined in Section 1098, is imposed upon real property on or after January 1, 2008, the person or entity imposing the transfer fee, as a condition of payment of the fee, shall record in the office of the county recorder for the county in which the real property is located, concurrently with the instrument creating the transfer fee requirement, a separate document that meets all of the following requirements:
(1) The title of the document shall be “Payment of Transfer Fee Required” in at least 14-point boldface type.
(2) The document shall include all of the following information:
(A) The names of all current owners of the real property subject to the transfer fee, and the legal description and assessor’s parcel number for the affected real property.
(B) The amount, if the fee is a flat amount, the percentage of the sales price constituting the cost of the fee, or the method for calculating the amount.
(C) If the real property is residential property and the amount of the fee is based on the price of the real property, actual dollar-cost examples of the fee for a home priced at two hundred fifty thousand dollars ($250,000), five hundred thousand dollars ($500,000), and seven hundred fifty thousand dollars ($750,000).
(D) The date or circumstances under which the transfer fee payment requirement expires, if any.
(E) The purpose for which the funds from the fee will be used.
(F) The entity to which funds from the fee will be paid and specific contact information regarding where the funds are to be sent.
(G) The signature of the authorized representative of the entity to which funds from the fee will be paid.
(H) For private transfer fees created on or after February 8, 2011, unless the exception in Section 1228.3 of Title 12 of the Code of Federal Regulations applies, the following notice in at least 14-point boldface type:
The Federal Housing Finance Agency and the Federal Housing Administration are prohibited from dealing in mortgages on properties encumbered by private transfer fee covenants that do not provide a “direct benefit” to the real property encumbered by the covenant. As a result, if you purchase such a property, you or individuals you want to sell the property to may have difficulty obtaining financing.
(c) The recorder shall only be responsible for examining that the document required by subdivision (a) or (b) contains the information required by subparagraphs (A), (F), and (G) of paragraph (2) of subdivision (a) or (b). The recorder shall index the document under the names of the persons and entities identified in subparagraphs (A) and (F) of paragraph (2) of subdivision (a) or (b). The recorder shall not examine any other information contained in the document required by subdivision (a) or (b).